Newspaper article The Evening Standard (London, England)

Ecclestone's $1Bn Stake Sale Cuts F1 Financial Ties; CITY BRIEFING

Newspaper article The Evening Standard (London, England)

Ecclestone's $1Bn Stake Sale Cuts F1 Financial Ties; CITY BRIEFING

Article excerpt


LONDON-based buyout group CVC Capital Partners is poised to take control of Formula One motor racing's purse strings, bringing an end to Bernie Ecclestone's financial interest in the sport.

CVC has agreed to buy the Ecclestone family trust's stake in SLEC, which owns the rights to the sport.

SLEC is owned 75% by three banks, BayernLB, JP Morgan and Lehman Brothers, with the remainder in the hands of the family trust of F1 supremo Ecclestone.

CVC is buying the stakes held by Bayern and the Ecclestone trust for an undisclosed price. The trust's 25% holding is said to be worth $1 billion ([pounds sterling]580 million).

According to the latest accounts for Formula One Administration, SLEC's main operating subsidiary, $610 million of retained profits are sitting in its coffers waiting to be paid as a dividend to shareholders.

CVC is also believed to be in talks with the two US investment banks about buying their 28% stake in SLEC. The banks acquired their stakes after lending $1.6 billion to German media giant Kirch which then went bust.

The stake in Formula One is the latest in a string of high-profile UK-based investments for CVC including Kwik-Fit, the AA and Debenhams. It also owns Dorna, the Spanish company which holds the rights to MotoGP - F1's twowheeled equivalent.

Ecclestone is expected to stay as chief executive of F1's operating companies. The contract binding the 10 F1 teams to race for SLEC expires in 2008. Only three teams, Jordan, Red Bull and Ferrari, have signed with Ecclestone so far.

The car manufacturers behind five of the remaining teams are threatening to set up their own race series unless the teams receive a greater share of F1's revenues and more say in how the sport is run. Bayern's Gerhard Gribkowsky, the current chairman of SLEC, will continue to lead discussions with the carmakers.

A Manufacturers' spokesman says they "plan to continue negotiations with SLEC and the FIA [the sport's governing body] regardless of the change in ownership". …

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